Vringo Soars 21% Approaching Google Talks; Maxim Ups Target to $10

By Tiernan Ray

Shares of intellectual property house Vringo (VRNG), which has been suing Google (GOOG) over what it claims are fundamental patents related to Internet search, are soaring today, up 96 cents, or 21%, at $5.50, after a wave of developments in the last few days.

On Friday, the company said it was entering into negotiations with Google after the court ordered it to do so. Then this morning, Vringo said it filed another suit against Chinese phone maker ZTE (0763HK), accusing it of infringing on three European patents.

In a note to clients today, Maxim Group’s John Tinker reiterates a Buy rating on Vringo shares, and raises his price target to $10 from $6.50, writing that Vringo appears to have Google in a tight spot going into negotiations and that Google might pay hundreds of millions to Vringo or simply buy them:

The judge stated that GOOG and VRNG must meet tomorrow, Tuesday, October 9, at 10.30am in Norfolk, Virginia to see if they can negotiate a settlement. VRNG‘s expert witnesses are seeking about $696M plus interest for historical licensing and could be asking for another $700M for future royalties (until 2016). GOOG is in a tricky position; if they pay a patent troll, this could open the doors to further cases. On the other hand, a company that professes to “do no evil” should pay a licensing fee for someone else’s idea that they are using, in our opinion. One possible outcome is that GOOG buys VRNG and then uses the patents in turn as a strategic weapon against Microsoft (MSFT) for similar infringement.

Tinker raised his “damages” estimate for any settlement to $1.4 billion, which results in $15 per share in value, based on a Vringo share count of 92.3 million shares.

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There are 5 comments

OCTOBER 8, 2012 2:52 P.M.

Put them in that pile wrote:

"This morning, Vringo said it filed another suit against Chinese phone maker ZTE (0763HK), accusing it of infringing on three European patents."

I believe this litigation is directly related to the patents Vringo very recently "acquired" from Nokia...

OCTOBER 8, 2012 5:02 P.M.

Michael wrote:

Google is not trading at $1755. Someone needs to re-edit this article.

OCTOBER 8, 2012 5:08 P.M.

AppleGrandCentral wrote:

VRNG is not a troll on Google search patents. Ken Lang, inventor of these patents is owed $$$$ for his invention.

Vrng is not a troll on ZTE case, since Nokia spent billions over decades developing their inventions. Nokia, inventor of these patents is owed $$$$ for its inventions and Vrng is monetizing it well....

OCTOBER 8, 2012 8:32 P.M.

erik giles wrote:

Who is the patent troll? The big company that infringes, bullies, and in the worst case, buys out? Or the actual inventor claiming a fair royalty?

OCTOBER 9, 2012 10:42 A.M.

A troll is a troll is a troll... wrote:

@erik... so what, exactly, is it that vringo is supposed to have invented in this case? to all outward appearances they're suing based on patents originally granted to someone else but then subsequently purchased by vringo. i see no "actual inventor claiming a fair royalty" in any of this. i see vringo attempting to make a profit off of someone else's invention. btw... exactly what you're accusing google of doing.

the fact the original rights holders chose not to sue would suggest to me that they saw no infringement. the fact that vringo is suing (now that the original rights holders are out of the picture) suggests to me a troll simply trying to make a fast buck off of a large company with deep pockets. could i be wrong? sure. but the timing is suggestive. sorry. i call 'em like i see 'em.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.